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MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
STIR
Last week in a speech titled “The path back to low inflation in NZ”, RBNZ Chief Economist Conway stated that the OCR is near the peak and comfortably above neutral with the full contractionary effects yet to be felt.
- Conway also flagged uncertainties with respect to diverting resources, in an economy with no spare capacity, to cyclone-affected areas for the rebuild. If the rebuild generates inflationary pressure, interest rates would increase. “Alternatively, diverting Government resources from projects elsewhere in the country or funding the rebuild via increased government revenues would free up resources without the need for higher interest rates.”
- A pause in April is possible, but the May MPS would appear more logical for a policy guidance re-set on the back of a new set of forecasts encompassing both local growth setbacks and global growth developments.
- RBNZ dated OIS currently has 23bp of tightening priced for the April meeting with terminal OCR expectations at 5.15% (July). The market also has 30bp of easing priced by the November meeting and 41bp by February 2024.
Figure 1: OCR & RBNZ Dated OIS
Source: MNI – Market News / Bloomberg
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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